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Implementation Completion Report (ICR) Review - Lb: Agri. Infra. Devel.

1. Project Data:   
ES Date Posted:
Project Name:
Lb: Agri. Infra. Devel.
Project Costs(US $M)
 104.77  83.83
Loan/Credit (US $M)
 30.94  21.76
Sector, Major Sect.:
General agriculture fishing and forestry sector, General public administration sector, Roads & highways,
Agriculture fishing and forestry; Law and justice and public administration; Transportation
Cofinancing (US $M)
 11.93  11.99
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
06/30/2003 12/31/2004
Prepared by: Reviewed by: Group Manager: Group:  
Ridley Nelson
John R. Heath Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives
The project objectives stated in the SAR were: (i) to develop land and water resources on about 5,600 ha for the purpose of increasing farmers' incomes and protecting the environment through land terracing and harvesting of run-off water in small hill ponds; (ii) increasing access to and from isolated rural areas through the construction of about 300 km of agricultural roads; and, (iii) strengthening the institutional and implementation capabilities of the Green Plan and the Directorate of Studies and Coordination within the Ministry of Agriculture and establishing an Information Management System to provide data and policy formulation.

b. Components
There were three main components: (i) Land and Water Development (US$79.2 million total cost planned; US$70.6 million actual) including assistance for land terracing, construction of retaining walls, water conservation and orchard establishment; (ii) Agricultural Roads (US$17.6 million total cost planned; US$6.4 million actual i.e. less than 50%) aimed at improving access to mountainous agricultural areas; (iii) Institutional Support (US$8.0 million total cost planned; US$6.8 million actual) to support the Green Land and the Ministry of Agriculture including establishment of an information system and preparation of a national agricultural strategy.

c. Comments on Project Cost, Financing and Dates
Total project costs at appraisal were US$104.77 million. The actual total project costs at closing were US$83.83 million. The original loan amount was US$31 million. This was reduced in July 2001 by US$7.0 million to US$24 million, about a 20% shortfall. IFAD was a parallel financier at US$12.0 million equivalent. The project was extended by 18 months giving a long seven-year implementation period.

3. Achievement of Relevant Objectives:

Achievement evidence suggests the following. Increasing farmer incomes: probably achieved, however, with much of the cropping being fruit trees with slow maturity, it is too early to measure income increase. The original target was to raise incomes per hectare from US$42 under wheat to around US$7000 under fruit trees. The evidence suggests an achievement of about US$4,200, still a substantial income increase. Due to commodity price changes agricultural profitability fell during the project. Conserving the environment: probably achieved, however, although terracing and planting was carried out to approximately the target level no outcome evidence for this objective is presented such as sedimentation rates or reductions in soil loss. However, such evidence would take a number of years to measure with confidence. Improving access in rural areas: partially achieved, partially because it was only to about one third of the target level. Strengthening institutional capacity: partially achieved, an environment unit was established and screening criteria were developed for agricultural road construction and land development. Improved M&E is claimed. The planned Environmental Information and Monitoring Committee (EIMC) was not implemented, being replaced by the Environmental Unit. In the MOA, the National Agricultural consensus was started and other thematic publications followed. A National Agricultural Strategy was developed and endorsed by the parliamentary committee which recommended adoption by government.

4. Significant Outcomes/Impacts:

Land terracing marginally exceeded the target at 3,230 ha (target 3,140 ha). Terrace-wall construction fell short of the target due to lower than projected demand at 990 ha (target 2,085 ha). Hill pond construction fell short of the target at 110 units (target 250) but this was balanced by a very large increase in the targeted achievement for smaller concrete basin units at 2,980 units (target 50). Provision of seedlings fell substantially below the original target at 220,000 (target 970,000) however, surveys show that many farmers had financed their own seedlings. Road construction fell well short of targets at 113 km (target 300 km) due to difficulties in getting land-owner agreement and issues related to maintenance responsibility.

A QAG assessment in August 1998 rated both Quality at Entry and Quality of Supervision as fully satisfactory. The QAG panel highlighted the simplicity of the project which was important in a war-torn country unfamiliar with Bank procedures.

5. Significant Shortcomings (include non-compliance with safeguard features):

Weaknesses included: much slower than expected implementation (but this must be judged against the difficult country circumstances), problems with counterpart funds, staffing difficulties due to a public service hiring freeze, challenging procurement procedures, political difficulties in decision-making within the Executive Committee, problems with complex GP documentation procedures (which farmers complained about), failure of the EIMC component, the less intensive cropping patterns than expected - perhaps due to over-optimism at appraisal, and limited participation by MOA staff - leaving some questions about sustainability.
There are questions about the efficiency of the project. The ERR fell from 24 percent at appraisal to 13 percent at closing, which is still just above the opportunity cost of capital. However, this ICR review questions the ICR data. The ERR is based on the assumption of zero productivity in the without project scenario, claiming that fallow was “close to 100 percent". Apart from the fact that fallow at 100 percent seems to be a contradiction in terms (what was it fallowed for?), the appraisal report evidence showed fallow ranging from 20 percent to 70 percent across different areas. Nevertheless, the impact of an ERR adjustment on these grounds may be modest due to the low value of pre-project land enterprises. However, there are also questions about the lack of any gains in the without project net benefit stream. Any questions about over-estimates in the ERR need to be balanced against the lack of inclusion in benefit streams of off-site and social benefits.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
SatisfactorySatisfactoryHowever, there are questions about the without project scenario economic analysis assumptions which could push the ERR below the Opportunity Cost of Capital. But this was weighed alongside the absence of benefits counted for off site impacts such as sedimentation and other social benefits such as getting to hospital quickly.
Institutional Dev.:
Bank Performance:
Borrower Perf.:
Quality of ICR:

7. Lessons of Broad Applicablity:

The ICR contains a number of lessons, albeit not new, which are sustained by the evidence. With some modification, the most important are:
(i) Approval and financial procedures for project sub-component investments should be established and tested for efficiency before project start-up.
(ii) Early training in procurement is important especially where there is no prior experience with Bank procedures.
(iii) A strong environmental unit is needed for infrastructure and should be put in place at the start.
(iv) A strong M&E Unit is needed to function from the start of the project - the most often repeated OED lesson. This usually calls for either buidling on an existing M&E structure or initiating the establishment of a unit even before effectiveness.

8. Audit Recommended?  Yes

          Why?  1. There are questions about the economics of the project. 2. This is effectively a new borrower.

9. Comments on Quality of ICR:

The ICR is generally satisfactory. However, the economic analysis methodology has some questionable assumptions which are inconsistent with the appraisal report assumptions, and, in any case, that disparity is left without adequate explanation.

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